Sales of new vehicles plummeted in the U.S. as the effects of the coronavirus pandemic took hold and governments shuttered businesses and restricted travel to contain the spread of the virus.
Automakers on Wednesday reported a roughly 40 percent drop in sales through the first three months of the year compared to Q1 2019, roughly in line with projections before the end of the quarter. Sales through the nearly first two weeks of March, before state and federal officials began implementing more aggressive responses to coronavirus, helped blunt some of the impacts, but they nosedived March 13 after President Trump declared a national emergency.
Monthly sales are expected to plummet by as much as 60 percent in April as the full impacts of a near-total halt to much of the U.S. and global economy are felt.
"Most automakers, they're in survival mode," said Jessica Caldwell, executive director of insights at Edmunds. "March had at least 10 days of somewhat decent activity. If the country is in a shelter-in-place order until the end of April, you're literally going to see an entire month where auto sales are going to suffer quite significantly."
Asian automakers such as Hyundai have borne the brunt of the impact. The vehicles are more popular along the U.S. coasts, which have seen the biggest impacts from — and the most assertive government responses to — coronavirus, said Augusto Amorim, senior manager of Americas Vehicle Sales Forecasts LMC Automotive.
"In early March dealerships were still open, especially in the middle of the country," Amorim said. "So if you think about how things were developing, you had coasts shutting down first and then coming to the middle of the country."
Two of Detroit's Big Three automakers, General Motors and Fiat Chrysler, have also seen some of their sales propped up by their truck divisions, with strong sales of the Chevrolet Silverado and Dodge Ram. (Ford is not scheduled to report its sales figures until Thursday.) The sector may also be getting a boost from bargain-basement gas prices, which have dropped below $1 per gallon in parts of the country and are hovering at a national average of $1.92.
"Trucks are a need-based purchase, so the truck sector is a bit higher," Caldwell said. "They can be used in the business fleet, and also with gas prices being below $2 nationally, that helps with truck sales."
Automakers have introduced a range of incentives to try to lure customers, from Hyundai's offer to defer payments for six months for buyers who have lost their jobs, to extended 0 percent financing from General Motors and Fiat Chrysler. And they're trying to reassure buyers with touch-free deliveries and more expansive web-based buying experiences.
Analysts expect sales to start to slowly recover by early summer, depending on the ongoing scope of the health crisis. However, Q2 sales will likely be pinched by another factor:
"Fleet sales account for about 20 percent of the industry because these are booked ahead of time with fleet sales and deliveries — but people who put in fleet orders may be going to delay or cancel," Caldwell said. "So we may not even have the prop-up for April that we saw in March. We know there's not going to be demand on the rental side — that could be another big hit for automakers in the next quarter."